A divided Court held that plaintiffs must be granted
leave to bring an action for secondary market misrepresentation
under the Ontario Securities Act within three years of the
alleged misrepresentation, regardless of whether a class proceeding
has been commenced.
In CIBC v. Green, 2015 SCC 60, a much-anticipated
decision, the Supreme Court of Canada held this morning that leave
of the court to commence an action for secondary market
misrepresentation under the Ontario Securities
Act1 must be obtained within the prescribed
three-year limitation period, and that the limitation period for
obtaining leave is not tolled in circumstances where a class
proceeding has been commenced. However, the court has the
jurisdiction to grant "backdated" leave — an order
nunc pro tunc — where the plaintiff is granted leave
after the expiry of the limitation period but filed the leave
motion prior to the expiry of the limitation period. The decision
by a heavily divided Court came in a trilogy of cases –
Green v. CIBC, Silver v. IMAX, and Celestica v.
Millwright Regional Council of Ontario Pension Trust Fund
— reported as CIBC v. Green
Our discussion of the background and context of these cases is
The Court largely upheld in result the decision of a unanimous
panel of five judges of the Ontario Court of Appeal. However, the
majority in the Supreme Court disagreed with the Court of
Appeal's conceptual framework, and with the Court of
Appeal's conclusion that the limitation period for obtaining
leave to commence an action for secondary market misrepresentation
could be tolled by commencing a proposed class proceeding.
At issue was whether section 28 of the Ontario Class
Proceedings Act,3 which tolls a limitation period
once a cause of action is "asserted", applies once leave
is sought to commence an action for secondary market
misrepresentation under the Securities Act, or only once
such leave is granted by the court.
A bare majority of Justices McLachlin,
Rothstein, Côté and Cromwell held that merely
pleading an intention to seek leave under the Securities
Act in a proposed class proceeding does not amount to
"asserting" a claim for the purposes of section 28 of the
Class Proceedings Act. Rather, a cause of action for
secondary market misrepresentation is only "asserted"
once a representative plaintiff obtains leave of the court to
commence the action.
However, the majority held that the Court has the jurisdiction
under rule 59.01 of the Ontario Rules of Civil
Procedure4 to grant leave nunc pro tunc
— i.e., to "backdate" its order granting leave to
bring an action for secondary market misrepresentation —
where the Court makes the order after the limitation period
expires. The Court should only exercise this discretion where the
representative plaintiff seeks leave under the Securities
Act before the three-year limitation period prescribed in the
Act expires. The majority agreed that nunc pro tunc orders
should be granted sparingly, but due to factual disagreements the
Court did not provide more guidance than that. The majority also
agreed that the doctrine of special circumstances does not apply to
provide the court with discretion to extend the limitation period
in respect of secondary market disclosure.
The Court unanimously upheld the Court of Appeal's decision
that the threshold for leave to bring an action for secondary
market misrepresentation under the Securities Act is
whether the plaintiff has a reasonable or realistic chance that the
action will succeed.
Due to the divisions in the Court, and the discretionary
approach taken by the majority to whether to allow statute-barred
claims to proceed, this decision provides significantly less
certainty than the Court of Appeal's previous decisions on this
issue. The take-away for litigants is that while defendants will
have greater opportunities to oppose leave motions on the basis of
the expiry of the applicable limitation period, proposed
representative plaintiffs are likely to move more expeditiously to
seek leave, putting increased pressure on defendants who intend to
contest such motions. Further, by endorsing the discretionary
solution of a nunc pro tunc leave order, the Court has
ensured that even where a claim may be statute-barred, plaintiffs
will nonetheless likely seek leave to bring the claim. It remains
to be seen whether the Legislature will respond with amendments to
either the Securities Act or the Class Proceedings
In Ontario Securities Commission v. Tiffin, the Ontario Court of Justice clarified the limits of the definition of "securities" under s.1(1) of the Securities Act, as it relates to promissory notes. The defendant in the case was charged with trading in securities without being registered and while prohibited, and without filing a prospectus.
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